Should Investors Buy the Dip in Scorpio Tankers (STNG) Stock?

Evermore Global Advisors recently released its Q2 2020 Investor Letter, a copy of which you can download here. The Evermore Global Value Fund posted a return of 10.35% for the quarter, underperforming its benchmarks, the MSCI All Country World Index ex USA (MSCI ACWI ex USA), the MSCI All Country World Index (MSCI ACWI), and the Morningstar World Small/Mid Stock Category Average. You should check out Evermore Global Advisors’ top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash.

In the said letter, Evermore Global Advisors’ highlighted a few stocks and Scorpio Tankers Inc (NYSE:STNG) is one of them. Scorpio Tankers Inc (NYSE:STNG) is a shipping company. Year-to-date, Scorpio Tankers Inc (NYSE:STNG) stock lost 67% and on July 31st it had a closing price of $13.22. Here is what Evermore Global Advisors’ said:

“Scorpio Tankers (STNG US), one of the world’s largest product tanker operators, was the largest detractor to Fund performance during the second quarter. COVID-19 has caused significant demand destruction in oil and other refined oil products which resulted in contango for diesel, jet fuel and gasoline forward prices that made floating storage an attractive option for traders and refiners. We saw the positive impact on spot rates at the end of March and April, which pushed rates higher to unprecedented levels.

Starting in late April, Saudi Arabia, Russia and OPEC+ eventually agreed to cut oil production which led to the contango trade to dissipate, which negatively impacted spot rates and STNG’s stock price. While current rates are no longer at record high levels, we believe STNG secured attractive rates during the second quarter and we expect the company to generate significant cash flows, a view that has been dismissed by the broader market. In addition, STNG has reached an agreement with scrubber manufacturers to delay the purchase and installation of 19 scrubbers until at least 2021 in order to take advantage of the current environment.”


In Q1 2020, the number of bullish hedge fund positions on Scorpio Tankers Inc (NYSE:STNG)  stock decreased by about 24% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t seem to agree with Scorpio Tankers’ growth potential. Our calculations showed that Scorpio Tankers Inc (NYSE:STNG)  isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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Disclosure: None. This article is originally published at Insider Monkey.